PERC released a report on the impact of comprehensive credit reporting in Australia and New Zealand. The report summarizes the results from a pioneering joint undertaking by PERC and Dun & Bradstreet Australasia using credit data from 1.8 million Australians. The results of this study show strong empirical support for the credit reform in Australia.  With fair file reporting, fewer lending errors are made and more credit is made available to the borrowers.  In addition, a comprehensive credit reporting system benefits young borrowers the most. The list of those benefiting from a fair file system also includes people with blemished credit history. The study also shows the impacts of use of alternative data in credit scoring.  It shows how non-financial account data; specifically telecommunications data is valuable in risk assessment. The results of this study are broadly consistent with international evidence that suggests that a more comprehensive credit reporting system results in more lending, better lending and fairer lending.   To download the report click on the link

At the end of November, the Australian Parliament passed the Privacy Amendment Bill 2012 enabling the sharing of positive payment data with credit bureaus. This landmark legislation removes yet another country from the rapidly diminishing ranks of negative only credit reporting systems. Such systems are brutally unforgiving, and are especially hard on lower income persons—often trapping them in financial exclusion and poverty.

Source:  PERC Newsletter